Posts

ECB Decision: 50/50 Chance Of A Rate Hike

Yesterday’s mixed U.S. inflation figures did not serve us well in terms of profitable trades as the dollar choppily whipsawed without a clear direction. This has led to a false breakout in both EUR/USD and GBP/USD. While the core inflation gauge was in line with estimates, the 12-month reading came in slightly higher than forecast. Traders are mostly anticipating no monetary action from the Federal Reserve next week with a view to a possible hike in November.

Today, the European Central Bank will decide whether to hike rates again amid worsening economic conditions in the Euro Area. Sources have suggested the ECB policymakers are about to upgrade their inflation outlook for 2024 to above 3 percent. This would mean a hawkish repricing of rate hike expectations. In short, it is now a 50/50 chance on whether the ECB raises rates today or not.

From a purely technical view, we now see short-term momentum in favor of the dollar, but if the ECB hikes today, the euro will rally.

Let’s see.

The ECB decision is due at 12:15 UTC followed by the press conference 30 minutes later.

In case the euro rallies, the next target is at 1.0835, while slipping below 1.0685, the next lower target is seen at 1.0630.

Daily Forex and DAX Signals:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals.

 

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

Greenback Strengthens

We were able to pocket some profit on our last trading days before the summer trading break.

Volatility picked up and the U.S. dollar strengthened. What happened at the ECB yesterday?

The central bank raised rates as expected. At the following press conference, ECB President Lagarde remained non-committal when asked about the possibility of a hike in September. This was seen as a dovish sign given Lagarde had been rather hawkish previously when pressed on future rate hikes. The euro consequently dropped below 1.1020 towards 1.0950 – the current support area. If 1.0930 remains unbreeched we may see some bullish movement.

Later today at 13:30 UTC we will have the PCE index scheduled for release which could have an impact on the U.S. dollar.

We will save our monthly profits today.

Have a good weekend!

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2023 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

Euro Outlook Remains Bearish Despite ECB Rate Hike

The European Central Bank joined the rate hiking party and raised interest rates by 50bp, instead of 25bp. The euro reacted to the rate hike with an initial jump toward 1.0278 but gains were capped at that level. It is not surprising that the euro’s upward potential was limited with euro-zone break-up risks rising. Italy’s Prime Minister Mario Draghi resigned, throwing the country into turmoil and putting it on course of snap elections as early as October. The ballot may take place on October 2.

Political chaos in Italy adds to the litany of problems for the European Union, which is already grappling with the consequences of the war in Ukraine, the energy crisis and the threat of a recession.

Given all the eurozone troubles we remain bearish on the euro. Below 1.0080, we expect more losses to come. Above 1.0280, the euro may test the 1.0350-resistance.

Have a good weekend.

Our EUR/USD trading ideas  for 22/7/22:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals.

EUR/USD

Long @ 1.0235

Short @ 1.0165

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

ECB Decision: How Will The Euro React?

It’s ECB decision day and it won’t be an easy task for ECB policy makers. The euro rose to a high of 1.0273 in anticipation of a bigger-than-expected rate increase today. Traders are now placing almost 50 percent odds on a half-point hike. And while we know that the market often gets ahead of itself, it may need to correct premature assumptions according to the old adage “buy the rumour but sell the fact”. There is another crisis looming in the EU: Italy’s government appears once again to be on the brink of collapsing. The markets would want to see Prime Minister Mario Draghi remaining in power because he brought stability to Italy. His departure could force the ECB to dilute or delay details of its new bond crisis tool. The tool is intended to curb unwarranted spikes in sovereign yields. If Draghi goes, Italian bond yields will rise on heightened political uncertainty. The political turmoil in Italy could thus complicate the European Central Bank’s efforts to raise interest rates for the first time in a decade.

How will the euro react?

The common currency will rise if the ECB raises interest rates by 50bp today while signaling a faster-than-expected pace of policy tightening. However, there is a risk that a bigger hike damages the ECB’s future guidance, a risk the central bank may be unwilling to take. Even in case of a euro rise, it will probably be limited.

The euro will fall if the ECB hikes by only 25bp.

However, the devil is in the detail, so we will brace for heightened volatility today and wish everyone good trades.

The ECB rate decision is scheduled for 12:15 UTC. ECB President Christine Lagarde is due to speak at 14:15 UTC.

EUR/USD: Potential SHS-pattern to predict upcoming losses?

As long as the euro trades below 1.0280, a head-shoulders-pattern could come into play as soon as the pair falls below 1.01. Another test of the parity level would be a next target for euro bears. The pattern becomes void if the euro breaks above 1.0275.

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

 

Daily Forex, DAX And Crypto Signals:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

A Euro Slump Is More Likely Than A Recovery

Welcome to a new and crucial trading week.

The European Central Bank is expected to begin raising interest rates this month for the first time since 2011. The ECB’s decision and press conference are scheduled for Thursday.

After years of low inflation, the ECB is now confronted with a price spike that forces policy makers to join the kind of aggressive policy tightening deployed elsewhere. In a normal world, aggressive monetary policy tightening would buoy the euro but the risk of a euro-area recession is now seen at 45 percent, up from 30 percent in June. Apart from the eurozone’s gloomy outlook we also have to understand the role of the U.S. dollar.

The dollar’s gain is the world’s pain. A stronger U.S. currency has historically translated into a broad hit to the world economy. Higher-than-expected inflation has forced the Federal Reserve to hike rates at the fastest pace in decades and this kind of aggressive tightening has supercharged the U.S. dollar. Tighter U.S. monetary policy tends to boost inflation elsewhere because of the currencies that weaken against the dollar. Additionally, there is a European problem which sends the euro lower and the dollar higher in return and worsens the manufacturing cycle. Germany faces a double whammy as soaring natural gas prices also cut into its manufacturing sector. Germany’s economic growth model was for decades built on cheap Russian energy and without German growth the outlook for the Eurozone could be dark. As for the Fed and with U.S. inflation standing at 9.1 percent, the central bank has little room to reverse course on its tightening mode to provide some relief to exporters and leveraged borrowers around the world.

What is expected from the ECB on Thursday?

A 25bp hike this month is described as a done deal, followed by a 50bp move in September and 25bp increases in October and December. However, with Eurozone annual inflation currently at 8.6 percent a larger-than-expected hike may be needed. The question of 25 or 50 basis points, already controversial, would have been the main issue by now were it not for an outbreak of Italian debt turmoil that forced ECB President Christine Lagarde to hold emergency talks and extract a pledge for a new tool. The ECB will want to keep Italian borrowing costs under control in an effort to spur economic growth. The political turmoil in Italy could thus complicate the European Central Bank’s efforts to raise interest rates.

Whatever happens, a further slump in the euro is more likely than a recovery.

 

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

 

Not Our Favorite Trading Day

And in the end, we got a bearish breakout in the EUR/USD, even though the European Central Bank outlined a slightly more aggressive path than previously expected. The ECB committed to a 25bp hike in July and signaled a bigger hike in the fall. Thus, policy makers have left open the possibility of a historical 50bp hike in September and October. However, despite the hawkish message, the ECB seems to be far behind the inflation fight, raising the risk of a recession in the EU on the back of persistent and dangerous inflation. Looking at the DAX which dropped towards 14000 following the ECB decision, the euro’s struggle may seem only natural.

As for our signals, we had to go on a loss-making roller coaster ride before we saw some green pips in the very end.

Traders will pay particular attention to the U.S. inflation data today at 12:30 UTC. A higher reading could spur safe haven flows, which could be slightly positive for the U.S. dollar.

We wish you a nice weekend.

 

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

ECB To Pave The Way For Rate Hikes

It’s decision day at the European central bank. In the wake of rising inflation at a record pace, ECB President Christine Lagarde and her colleagues will end asset purchases and pave the way for exiting eight years of negative interest rates. Traders expect a first ECB rate hike to come as soon as July. Normally rate hike projections are positive for the respective currency, so the euro would rise. The problem is that the market has already priced in an aggressive hawkish outlook, which is why less-hawkish rate hike expectations could even send the euro lower.

The key issue is: Is the ECB pressured to hike 50bp even sooner rather than later? Market speculations have often gone too far too fast which is why we see potential for disappointment and thus, a falling euro.

Traders have priced in 37.5 basis points of tightening by next month, implying a 50 percent chance of a 50bp rate hike.

The most likely scenario however, is a cautious exit strategy and smaller rate increases in July and September.

The ECB rate decision is due at 11:45 GMT followed by the press conference 45 minutes later.

EUR/USD

Bullish breakout: Bulls will wait for prices above 1.0760 in order to buy euros towards 1.08. A sustained break above 1.0810 could see further gains toward 1.09.

Bearish breakout: A break below 1.0670 and further 1.0640 could ignite bearish momentum towards 1.06. Below 1.0580, the euro could even fall towards 1.05.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

Will The ECB Deliver A Historic Rate Hike In October?

The U.S. dollar soared after Friday’s non-farm payrolls report came in better-than-expected with 390k jobs in May. Strong hiring suggests that the Federal Reserve will continue the pace of steep interest rate hikes to combat price pressures. As for U.S. inflation, the next focus is May consumer prices due for release on Friday.

The European central bank is next in turning the tide from an accommodative monetary policy to a tight monetary policy. The ECB will this Thursday announce an end to bond purchases and will formally begin the countdown to interest rate increases.

Historic ECB rate hike in October? The pressure on the ECB is rising

Traders have increased their bets that the European Central Bank will deliver the biggest interest rate increase in two decades at their December or even sooner at their October meeting. What has been elusive just a few months ago will now become a reality. Soaring inflation exerts pressure on policy makers to act sooner rather than later. High inflation, that has surprised even policy makers, is proving more persistent than earlier thought.

While the door is not totally shut for a 50bp move in July, it would be quite surprising for the ECB to start its hiking cycle with such a big step. Market participants expect quarter-point hikes in July, September and December, but chances of an earlier half-point rate hike in September or October have grown.

According to ECB President Christine Lagarde, the central bank will end bond purchases in June, and hike once in July and once in September, lifting the deposit rate from minus 0.5% up to zero.

However, apart from rate hike cycles, the decisive aspect is whether rising inflation can be brought under control by central banks without generating a recession at the end.

We expect higher volatility in the EUR/USD around the risk event on Thursday. For the next days it will be interesting whether the euro remains trading between 1.08 and 1.06. If speculations on bigger ECB rate hikes increase, euro bulls may try to test a break above 1.0810 with a next target at 1.09. If 1.06 breaks however to the downside, we expect the pair to drop toward 1.05 in a next move.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

EUR/USD Forecast: Bullish

In a world where most central banks have turned aggressively hawkish to fight high inflation, China indicated looser monetary policy. China is expected to cut its key interest rate for the second time this year on Friday as Covid lockdowns sap the economy. China’s dovish approach has caused bond traders to dial back aggressive bets on Federal Reserve rate hikes. The U.S. dollar depreciated against other peers.

Today we will pay most attention to the European Central Bank decision at 13:45 Frankfurt time and the press conference 45 minutes later. The euro rose ahead of today’s decision as markets see two-quarter point interest hikes by October. The even traditionally dovish ECB sees the need for policy normalization in the face of surging price pressures. Even though no major decisions are expected at today’s meeting, the focus will be on hints about the pace of exiting the central bank’s ultra-loose policy.

EUR/USD – Short-term outlook: Bullish

Technically, the short-term outlook is bullish until approximately 1.10. Whether we could even see a further leg-up towards 1.11 will hinge on the ECB’s hawkishness. The less-likely bearish scenario eyes a downside break of 1.0790 with a lower target at 1.0650.

Daily Forex, DAX And Crypto Signals:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

 

ECB 2022 Rate Hike Off The Table?

The anti-risk U.S. dollar weakened while we saw rebounds across the board Wednesday. The sentiment was lifted yesterday following a report that Ukraine is open to discussing Russia’s demand of neutrality as long as it’s given security guarantees. Volatility is however not over and the outcome of the war in Ukraine is still a big unknown.

Today traders will turn their eyes to the European Central Bank decision and ECB press conference at 12:30 UTC. At the same time, we will have U.S. inflation data due for release.

What to expect from the ECB?

While the ECB was already attempting to suppress the market’s rate hike speculation in 2022 before the threat to economic growth from Russia’s invasion began to rise, the new situation will possibly only harden their position. With the implications of the war in Ukraine still uncertain, it will be too early to send a hawkish message this month. While even higher inflationary pressure pushes policy makers toward policy normalization, the duration of the war could delay the exit from the ECB’s expansionary monetary policy.

In short, with chances of a 2022 rate hike tending towards zero, further gains in the EUR/USD pair might be limited.

EUR/USD – Strong rebound

Following yesterday’s incredible ‘risk on’ day with the euro’s rise towards 1.11, we may see some bullish extension until approximately 1.1170 before selling pressure accelerates again. Bears will watch out for a fresh decline below 1.0940 in order to sell euros towards 1.07.

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram